Ferg Acctg Bellringer 8 Financial

Which of the following is an example of how publicly-traded companies can apply the principle of conservatism with their financial statements?

• Recognizing accounts payable immediately on the financial statements.

• Recognizing a potential gain from a lawsuit immediately.

• Recognizing the cost of goods sold after the company's inventory has been exhausted.

• None of these are correct

Which company, listed on the New York Stock Exchange would definitely be in breach of the Going Concern Principle?

• Company D, which has run out of cash and is now not able to pay its creditors.

• Company B, which has made a net loss this financial year.

• Company C, which shows a net cash outflow in its statement of cash flows.

• Company A, which has decided to issue new shares to foreign nationals.

Michael, the majority shareholder of a company, decided to produce the company's balance sheet whose cash balance included the cash in his own bank account. Would Michael be allowed to do this by GAAP?

• No, because of the economic entity assumption.

• Yes, because of the going concern principle.

• No, because of the revenue recognition principle.

• Yes, because of the full disclosure principle.

Adam wants to find out the assets and liabilities of a company. Which financial statement should Adam read to find out this information?

• Balance Sheet

• Statement of Retained Earnings

• Income Statement

• Statement of Cash Flows

The accounting department is responsible for recording and reporting the _____, both in and out, of a company.

• cash flows

• time management

• delivered mail

• production capacity

_____ and technology go hand in hand.

• Change

• Computers

• Accounting

• Financial statements

What was the accounting firm that made unethical choices in the Enron scandal?

• Arthur Andersen

• Bob Lilli

• Sarbanes Oxley

• Jeffrey Skillings

What is the name of the first trial balance that must be prepared?

• Unadjusted trial balance

• Post-closing trial balance

• Trial balance

• Adjusted trial balance

GAAP sets the standards for the creation of what? (mark all that apply)

• Income Statement

• Balance Sheet

• Statement of Retained Earnings

• Invoices and receipts

Accounting is used.... where?

• Worldwide

• In the US only

• In North America

• What is accounting????